If you&rsquo,re at least interested ter the cryptocurrency space, you&rsquo,ve very likely heard of Ethereum. It&rsquo,s presently the 2nd largest coin by market cap, primarily because so many other tokens run on Ethereum, and partly because the development team is very talented.
Either way, this postbode is about the switch from POW to POS.
So, what is POW (Proof-of-Work)?
Well, POW is presently used by most cryptocurrencies including Bitcoin, Ethereum (for now) and Litecoin. If a coin is minable, that means it&rsquo,s utilizing a POW system.
Miners use their GPUs or ASICs to solve cryptographic hash functions which verify the blockchain. GPUs primarily designed for gaming like the RX 580 are now being employed by miners.
Their GPUs are rapidly guessing and checking different solutions to a next to unlikely math problem. When they successfully solve the equation, the ledger (blockchain) is updated and the miner receives a block prize ter the form of a token and/or transaction fees.
This is called Proof-of-Work because miners are doing lots of work ter the form of processing mathematical equations with their mining hardware. Without miners, many networks wouldn&rsquo,t exist. Miners pay for tens unit te exchange for tokens.
What is Proof of Stake and How it&rsquo,s different
Proof-of-Stake is a bit different. Previously miners proved how swift they could verify the network, now, ETH holders will voorstelling how much they own by running something called a master knot. When you create a master knot, you have to lock up a certain amount of ETH to prove you own it.
Prizes are distributed based on how much you have locked away and how long it&rsquo,s locked away for. Instead of 1,000 miners verifying the network for example, there might be around Ten,000 wallets holding Ethereum through Proof-of-Stake.
With POS, energy is conserved. Miners won&rsquo,t have to consume geysers of electro-therapy to solve cryptographic hash functions which is good for our wallets and good for the planet. Ter addition, by locking up Ethereum, a scarcity is created which should drive up the price.
Of course, it&rsquo,s not all sunshine and rainbows. It seems spil however with this fresh system, the rich will get richer and the poor, well, they&rsquo,ll still be poor. The fresh system prizes those who already have a lotsbestemming of Ethereum because block prizes are now distributed based on how much you already have.
Furthermore, the ETH mining community isn&rsquo,t going to be very glad when the fork occurs, spil their mining hardware won&rsquo,t be usable with Ethereum anymore. They&rsquo,ll have to switch overheen to a fresh currency that is still minable.
I expect to see Ethereum Classic spike at this time, spil I believe it will remain POW. It is also possible that a group of members ter the ETH mining community will create a fresh currency that forks from Ethereum, possibly called Ethereum Metselspecie.
If you&rsquo,re presently mining Ethereum, it would be wise to find a fresh currency to mine. There are still slew of options out there, such spil Litecoin, Vertcoin, Zencash, and more.
This update has bot te the works for a while now, delayed by problems such spil wallet updates and some pushback from the community. However, the CEO and the brains behind Ethereum, Vitalik Buterin, is all for the switch to POS.
Hopefully the switch won&rsquo,t result ter problems for the ETH community or network, spil it is a big decision which entirely switches the way the network is verified. With that being said, there&rsquo,s no need to fright. The Ethereum development team knows what they&rsquo,re doing. After all, they are the founders of the 2nd largest cryptocurrency on the market.
Just like everything else, it&rsquo,s wise to diversify yourself. Don&rsquo,t invest everything ter one coin, rather, it&rsquo,s brainy to hold a bit of everything. Further still, don&rsquo,t pour all of your assets into crypto because it&rsquo,s a very volatile environment.
If you&rsquo,re presently looking to buy ETH mining hardware, I&rsquo,d say go for it. If you do determine to make the purchase, understand you won&rsquo,t be using it for much longer. When purchasing, make sure the card is able to mine other currencies profitably spil well because you&rsquo,ll have to look elsewhere te the future. Until then, attempt to rake ter spil much ETH spil you possibly can!
This is a guest postbode wrote by Jacob Tuwiner, the proprietor of EasyPC.